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A retired Hewlett-Packard worker is suing the computer giant, claiming it short changed pensioners on a promise to gift discounts for its goods.

According to a report in The San Francisco Chronicle, the lawsuit, filed by Los Altos resident Mark Leonard, alleges that 3800 Hewlett-Packard workers haven't received rebates since they were designated as former worker from its testing equipment Agilent Technologies spin-off in 1999. Through the case, which is at its heart about a retired employee seeking to defend HP's much vaunted corporate culture against cost cutting measures, Leonard is asking HP to restore the rebate program.

Under the rebate program HP gave a 10 per cent rebate on goods such as computers and printers for workers who had 15 years at the company and were 55 when they retired.

Leonard, who is looking for other people to join him to launch a class action lawsuit, worked as an engineer at HP for 23 years until 1999, after which he was reclassified as an Agilent employee even though the firm didn't exist when he retired. He also argues that his department, which investigated chip-making technology, was taken apart before the Agilent spin-off.

Hewlett-Packard told the Chronicle that unlike pension payments, the rebate program was subject to change, and described the lawsuit as having "no merit".

A wide-ranging cost cutting program is underway at HP which, as previously reported, involves reducing the spaces of workers' cubes, or working area from eight feet by ten feet to eight feet by eight feet. The program also involves asking mangers to cut the number of temporary staff they use by 20 per cent and to scale back on off-site meetings, travel expenses and equipment purchases.

Following on from disappointing quarterly result in January, last week HP said it is cutting 2 per cent of its workforce worldwide, or about 1,800 employees.

The disappointing results were attributed by HP to a slowdown in the economy and a weakening in consumer and corporate demand. In better times, we can't see that HP would make an issue of giving a 10 per cent discount to certain pensioners, which is hardly going to cost it more than a tiny fraction of the amount it spent on consultants advising on the failed PricewaterhouseCoopers acquisition. This looks very like penny pinching. ®